Last September, Trans World Airlines lost Wendy Engel's baggage. She was on her way from Chicago to Washington, enroute to a wedding in New York.

She submitted an itemized bill to TWA for $1.121 for the items lost, including the baggage, plus another $280 in receipts to pay for a new suitcase and some clothes to wear until she got home, including a dress to wear to the wedding.

In December TWA sent her a check for $500. Until recently, $500 was the maximum a person could collect from an airline for lost or damaged baggage.

On April 19, new Civil Aeronautics Board rules went into effect raising the airline's liability to $750 and for the first time expanding the conditions under which damage could be claimed by passengers.

In addition to their liability for lost, delayed or damaged baggage, airlines will also be liable for compensation for expenses incurred by the traveler whose property was lost or delayed. For example, if a person had to temporarily rent replacements for lost or delayed property - like lost skis on the way to a skiing vacation - the airline could be liable for the cost of the rental. Wendy Engel's dress to wear to the wedding would also be eligible, although the maximum total a person could collect would be $750.

If a person declares excess value and pays an additional charge, baggage insurance is available from all airlines at check-in.

Many of the carriers already pay travelers for the expenses incurred as a consequence of the lost baggage, but it was on a voluntary basis which, the board said, was potentially discriminatory and appeared to be subject to the discretion of airport baggage service personnel.

In its new rules, the CAB also broadened the applicability of the liability rule to include all certified carriers, including charter airlines. They were not covered by the earlier $500 limit, which had been set in 1966.

The board acted - albeit slowly - in response to a petition originally filed in 1973 by the Aviation Consumer Action Project, a Ralph Nader-connected, non-profit organization that prods the CAB on consumer matters, which was seeking an update of the 1966 limit.

Although the board raised the limit to $750 - basing its decision both on the number of baggage claims that exceeded the only limit and the impact of inflation on the cost of goods since 1966 - it is not certain that figure is high enough and has left the door open to a further increase. About one in five claims submitted to the airlines by unhappy travelers are higher than $750, the board's examination of airline records indicated.